Today we are going to be examining the NASDAQ Index. This market, which made its peak in 2000 at the height of the dot com bubble, remains in a secular bear market.
After making a low in March of 2001, this market has had multiyear recovery which has rallied it very close to a 50% Fibonacci retracement level. After a nearly 50% recovery, this market now appears to be faltering.
The months of September and October are now with us and both of these months tend to be treacherous for the equity markets. We would not be surprised to see more of a two-way trading market before it eventually falls on its own weight and resumes a downward path. This is what we expect to happen, however, we are going to rely on our Trade Triangle technology to give us the perfect timing for that event.
In today’s video I will show you graphically what I expect to happen to the NASDAQ Index.
Well here I am at my vacation home in Maine watching the markets go crazy. Yes, we are so lucky to have access to the Internet and to the markets themselves no matter where we are in the world. I didn’t plan on doing a video today, but the market action left me no choice. Today we witnessed an important “Trade Triangle” signal in this major index that should not be ignored.
In my new video, I share with you this same signal that thousands of MarketClub members witnessed and will discuss some of the potential downside targets for this index. Enjoy!
There’s nothing like a good sell-off when you are prepared for it. Roll out of bed and drop 20 feet unexpectedly and it’s terrifying but willingly climb to the top of a waterslide to plunge 50 feet and it’s exhilarating. By the way, if you do drop 20 feet rolling out of bed – it may be a good idea to move your bed and if your virtual portfolio took a big hit in yesterday’s very minor correction, it may be time to move some of those positions as well.
We were not just prepared for a drop, we were almost bored stiff waiting for it but, in the end, the call to cash out our bull plays into the weekend was a very solid one and now we have 150 points to go before we have to consider a re-entry at those levels. So far, we have a very minor 1.5% pullback off a 15% run since July 13th so 1.5% more to go for a 20% retrace. That will give us 9,118 on the Dow which is, amazingly right about our 5% rule off 8,650 (9,082 to be exact) so let’s call that 9,100 and VERY significant. Our other 3% pullback lines are S&P 980, Nasdaq 1,950, NYSE 6,400 and Russell 550. This is the great thing about being the creator of the 5% rule – I can round off if I want to because, IT’S MY RULE.
I’m sure if Fibonacci were alive today he’d say: "38.2%, 40% – what’s the difference, it’s just a guideline!" Fibonacci discovered his sequences in his search for a way to blend math, art and nature. Clearly the stock market is ruled by math and human nature but too many chartists forget the art of the thing. That’s why our 5% rule bends around psychological chart resistance points, the flexibility we have to take market psychology into account is what allows us to hit our targets on the nose a year in advance but it’s the "art" of it that tends to bother people because it does require an intelligent person to look at a chart and decide which moves are real and which are not.
Why did we predict the market would be 40% off the top at the end of Q2 earnings last November? It was a combination of our fundamental analysis of the real damage that had been…
It looks as though this whole Flash trading controversy may have a simple, private sector solution, not requiring action by the SEC.
The NASDAQ says it’s eliminating Flash trading as of Sept 1. Flash trading allows some traders to get a sneek peek at big oders before others — defenders argue that it’s logical to give "local" traders, who are set up nearby a look at trades before they go out to the broader market. Either way, our guess is that this won’t prove to be a big deal, though it may cream some hedge funds.
If Flash orders had a significant impact on liquidity, the NASDAQ wouldn’t be doing this voluntarily.
Securities and Exchange Commission takes steps toward banning flash orders
By Stephen Bernard, AP Business Writer
NEW YORK (AP) — The Securities and Exchange Commission is moving toward banning a trading practice that gives some brokerages a split-second advantage in buying or selling stocks.
SEC Chairwoman Mary Schapiro said in a statement Tuesday that the agency is working to create a rule to ban the trades known as flash orders.
Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to allow those members to get better prices and profits…
Sen. Charles Schumer, New York Democrat, a critic of the orders, said in a statement that Schapiro personally assured him the SEC would ban the practice. Last month, Schumer sent a letter to the SEC urging it to eliminate flash orders and said that if it didn’t, he would write legislation to do so…
More and more UK pubs are closing — at the staggering rate of 52-per-week, actually. We don’t think it’s because drinking has gotten less popular, but rather drinking outdoors has gotten more acceptable.
Swine flu, which the US media has totally forgotten about, is getting really bad over there. The country had 100,000 new cases this week, overwhelming public health services.
It all sounds about right. Are we missing anything? Tell us in the comments.
Well, we don’t know for sure that the NASDAQ’s winning streak will come to an end… but when you have Microsoft (MSFT) and Amazon (AMZN) both tanking after hours on disappointing earnings reports, you kind of know tomorrow is going to be a down day.
Microsoft, in particular, missed by a mile and since they’re still so huge, that itself could doom the NASDAQ right there.
It wasn’t Ali who shocked the World knocking Joe Frazier down it was George Foreman.
In 1973 the undefeated Frazier had beat the unbeatable Muhammad Ali (everyone’s favorite Muslim) to take the title and had defended it twice in 1972 before being knocked out in just 2 rounds by Foreman (everyone’s favorite grill salesman). Frazier had 29 consecutive victories up to that point and seemed unstoppable but then, suddenly… unexpectedly… he was stopped. Giving Frazier huge credit he was knocked down 6 times before they stopped the fight but it was a beating nonetheless.
As recently as May 26th, we had looked to copper as a bullish sign as they broke out over $200 but oil was only $60 at the time. Since then, both copper and oil have rocketed 25% to the point at which I warned of hyperinflation in a special post last Thursday. Let’s take this move VERY seriously as it took days after I started worrying about copper for the commodity to finally drop and my observation on May 12th was that investors had finally realized that "China buying copper to stack it up in warehouses wasn’t a buying premise." That gave us a great week last options expirations as we took bearish stances on Agriculture, Oil and Metals right into Monday’s mega-pump as the Dow then gave up 600 points between that Monday’s post, where I called for a meltdown, and that expiration day Friday when I said: "We are already on vacation, having followed our plan to cash out at the bottom yesterday anticipating some short covering today that would take up the markets."
That gave us a very happy holiday weekend and we did get our rally on light volume during the next, short week…
"It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud. The behaviour that caused the mortgage bubble and financial crisis of 2008 was a natural outcome and continuation of this pattern, rather than some kind of economic accident...And yet none of this conduct has been punished in any significant way."
~ Charles Ferguson, Inside Job
"I know that my retirement will make no difference in its [my newspaper's] ca...
We are discreet sheep; we wait to see how the drove is going, and then go with the drove. We have two opinions: one private, which we are afraid to express; and another one – the one we use – which we force ourselves to wear to please Mrs. Grundy, until habit makes us co...
The S&P 500 got off to weak start and, after retracing a modest morning rally, spent most of the day in the shallow red with an intraday low of 0.63%. But in the last seven minutes of trading, the index recovered enough to a make a small gain of 0.14%. This is the fourth advance, the first was Monday's 1.60 surge, but the last three have ranged from 0.05% to 0.17% with today's close near the high of the miserly three-day series.
The index is now up 5.02% for 2012, which is 6.93% off the interim closing high.
From an intermediate perspective, the S&P 500 is 95.2% above the March 2009 closing low and 15.6% below the nominal all-time high of October 2007.
Below are two charts of the index, with and without the 50 and 200-day moving averages.
TIF - Tiffany & Co., Inc. – A surprise earnings miss and a reduced full-year profit and sales forecast from luxury jewelry retailer, Tiffany & Co., took some of the luster out of its shares today, with the stock trading down 8.5% at $56.55 as of 11:50 a.m. in New York. Options activity on Tiffany this morning suggests mixed sentiment on the st...
RealNetworks, Inc. (NASDAQ: RNWK) today announced that it has reached an agreement with the Washington State Attorney General over discontinued e-commerce practices. In accordance with the settlement agreement, RealNetworks has committed to:
Discontinuing the use of pre-checked boxes for purchases of RealNetworks subscription products; Spelling out more clearly the material terms of RealNetworks product offerings; Offering online cancellation of subscription offerings; Enhancing RealNetworks customer support guidelines regarding cancellation. Statement from Thomas Nielsen, President & CEO of RealNetworks:
"About two years ago, the Washington State Attorney General's Office contacted us regarding concerns they had with some of our e-commerce practices.
To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...
First we'll go to the technicals. Back in mid April I had opined a 'bear flag' formation was being created. [Apr 17, 2012: Potential Bear Flag Forming] But the market being the difficult beast it is, head faked everyone and rather than a break down from said flag it first went UP and nearly touched yearly highs. This caused everyone to think the bear flag had failed…. only to lead to a horrid May in the market. Generally a bear flag will resolve relatively quickly but the longer...
Despite the fact that U.S. equities are well-positioned and well-supported to go up, once again it is the headlines out of Europe—especially Greece—that are scaring off investors. Some are saying that it is now likely (and even desirable) that Greece will default on all its sovereign debt, withdraw from the euro, and severely devalue its domestic currency (Drachma?). This will allow them to operate a balanced budget while pumping cash into growth initiatives, rather than suffer the ravages of Germany-mandated austerity.
Some say, so what? Greece makes up only about 2% of the Eurozone’s overall economy. Nevertheless, you might say that t...
Markets died and then rallied to flat again as European leaders “prepared contingencies” for a possible Grexit
Markets died hard and fast earlier today as major indexes registered as much as 1.5% of losses after news that Euro zone officials were unofficially “preparing contingencies” for a Greek exit from the Euro. Unofficial statements were not enough to keep markets down however, as major indexes rallied back to flat levels by the end of the day.
So the world continues to wait on Europe, as the SPDR S&P 500 ETF (NYSEACA:SPY) gained .05%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:...
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This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin.
FAS Money
We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update.
Last update P&L - $5499.00
IWM Money
Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update.
Last update P&L - $1998.00
$5KP Portfolio
This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K.
AAPL $50K P...
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As recently as May 26th, we had looked to copper as a bullish sign as they broke out over $200 but oil was only $60 at the time. Since then, both copper and oil have rocketed 25% to the point at which 
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(